The author is a Forbes contributor. The opinions expressed are those of the writer.

Loading ...

Loading ...

This story appears in the {{article.article.magazine.pretty_date}} issue of {{article.article.magazine.pubName}}. Subscribe

I am thrilled that Bill Gates and Warren Buffett are busily giving away their wealth through charity. It is especially laudable that they are giving it away before they die rather than set up perpetual foundations as monuments. But despite these feelings, I take issue with those who feel that Gates has a moral obligation to “give-back.” It’s as if he stole his wealth and now must humbly make restitution for his crimes through charity. Bill Gates and many entrepreneurs like him often help their fellow man far more through their business success than they can through charity, and I am a living case study for my argument.

On March 31, 2000 my partners and I sold our company. After the deal closed, I sent Bill Gates a note thanking him and Microsoft for helping to make our dream come true.

First of all Gates and Microsoft supplied much of the inexpensive technology that made our company possible. In 1993 we started on a proverbial shoestring in an office resembling a shoebox. It was only through Microsoft Office and so many other technologies that we were able to avoid assistants, receptionists, accountants, and layers of bureaucracy that we could not hope to afford. We also used technology to eliminate much of our printing, mailing, and travel costs: overhead that a few scant years earlier would have made it prohibitively expensive to start our company at all without the aid of deep pocket investors.

Second, by using Microsoft’s technology to avoid investors - assuming we could have found them - we were able to maintain complete control of our company. This autonomy proved far more valuable to us over the next seven years than getting most of the proceeds when we were eventually acquired.

Third, Microsoft created most of the inexpensive software tools that we in turn used to create our own software. Without these tools our products would have been prohibitively expensive to build. With Microsoft’s help we were able to accomplish with one or two programmers what would have required dozens only a few years earlier.

The fourth debt I owe Bill Gates is the ecosystem of start-ups like ours that Microsoft spawned and supported. The software tools we eventually built and marketed complemented Microsoft’s product line. Like many other companies we were able to prosper by filling a hole that was either too small or non-strategic for Microsoft to fill itself. Microsoft called companies like ours Independent Software Vendors (ISVs), and in 1997 our company was 49th on a list of Microsoft’s 100 fastest growing ISVs. But more germane to my argument is that Microsoft surveyed over 10,000 ISVs in their ecosystem to come up with their top 100. Some of these companies would doubtless have been successful without Microsoft’s help, but thousands more, like mine, were only successful because of Microsoft.

The fifth benefit we received was the informal strategic alliance we were able to build with Microsoft. We never had a contractual relationship, but when I pitched my product idea to some Microsoft executives they graciously offered us free software, marketing help, and even an office on Microsoft’s campus so our programmers could have easy access to their own. Over the years so many folks at Microsoft stepped forward to help us that one day I asked Jon Roskill, a Microsoft executive, why they were doing it. “Heck Augie,” he said with a grin, “we just get a kick out of seeing good people become successful.” The strategic help we got from Microsoft’s people went far beyond narrow self-interest.

The sixth benefit was the humanitarian value that Microsoft created through the ripple effect of companies like ours. Microsoft has provided great jobs for tens of thousands of people worldwide. Many ordinary people have also benefited through Microsoft stock held in their pension plans, IRAs, and mutual funds. But beyond these direct benefits, there are also the hundreds of people our company was able to employ over the years; the jobs created by the dozens of vendors we religiously sent checks to each month; and the companies that used our software to produce the profits that allowed them to hire many more. And the benefit that I experienced through this Microsoft ripple effect was the satisfaction of knowing that by being in business I was helping others as well.

Finally, and perhaps most importantly, hundreds of millions of consumers have benefited from people like Bill Gates and Steve Jobs. They have created products that have made our personal lives better and our work lives more productive. These consumer benefits are particularly striking in the less developed world where, for example, hundreds of millions of people who used to wait forever for a land line phone are now eagerly accessing the internet and toppling dictatorships through their cell phones. And I benefited yet again by feeling that our company was playing a small part in making the world a better place for consumers to live in.

At heart I think the argument that people like Bill Gates have failed to “help others,” and are morally obligated to “give-back” is based on a misunderstanding of the word “profit.” For many, profit is a dirty word that implies a zero sum game; companies like Microsoft and people like Gates can only “profit” from another human being’s “loss.” The fact is we all want to “profit” from our efforts. Even an amateur gardener like me wants to generate more value from the vegetables I produce than the seed capital I invest in seed and fertilizer. Profit is what creates an ever expanding pie that increases the standard of living of whole countries. A few years ago India’s prime minister said that his own country’s turn toward a market based economy had lifted more than 100 million people out of poverty: something, he pointedly reminded his audience, 50 years and billions of dollars in charity had been unable to do.

I hope that nothing here will be construed as a radical endorsement of unfettered capitalism or the belittling of charitable giving. There are myriad problems that must be solved surrounding our free market system, and there are many human needs that are best addressed through the kind of charitable giving that Gates and Buffett are now engaged in.

In fact charity and profits are both essential and not necessarily mutually exclusive. My book, Business Secrets of the Trappist Monks, uses the 1000 year monastic tradition as a model for how charity and profit can be fused into a single business model I describe as service and selflessness. Trappist monks have run very profitable businesses for centuries based on products of only the highest quality. And they do so not despite the fact that they live for charity but because they do.

I wonder if Bill Gates actually received my note, but I hope that he did. Again I applaud his charitable giving, and to the extent that I can I am trying to do the same. However though I may be overly idealistic, I hope that his charitable impulse stems, not from misplaced guilt, but from the incredible satisfaction that only comes from the joy of giving for its own sake. Bill Gates has helped many people he will never know. I am one of them, and 13 years later I am still very grateful.